8/31/2023 0 Comments Mid south synergy esi numberWhile these issues are concerning, it's important to contextualize them. Management started 2022 expecting sales "slightly up" on the $15.5 billion reported in 2021, only to end up with $14.9 billion, as RMD struggled to procure inventory.įinally, the issues with GTF (Pratt & Whitney's flagship engine and one of two options on the Airbus A320 neo family of aircraft) include a part that will need to be taken off and replaced - resulting in a $500 million hit to cash flow in the first quarter. For example, while orders remain strong in the defense businesses, Raytheon Missiles & Defense (RMD) is having issues delivering due to needing more inventory in its factories. The supply chain headwinds have also created issues. Keep that figure in mind because I will return to it later. However, since then, there's been an incremental increase in the expected headwinds of $1.3 billion. Meanwhile, a combination of labor, commodity, customer concessions, and "give-backs" were expected to total $3.1 billion, meaning the net cost reduction would be $2 billion. It expected cumulative cost reduction savings of $5.1 billion. For example, during the investor day presentation in 2021, management gave the numbers around its plan for 2025. Operational issues around the geared turbofan (GTF) engine at Pratt & Whitney.Supply chain headwinds that have made it difficult to deliver products on time.Significant raw material, labor cost inflation, and other headwinds.I would classify these issues into three interconnected buckets, and I'll deal with each in turn below: While those factors apply and make RTX an attractive company, it makes no investing sense to gloss over the headwinds the company has faced and continues to face.
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